TopGolf’s successful mix: Swings, suds and socializing

ALEXANDRIA, Va. — Shortly before 10 p.m. on a recent Friday here at TopGolf, a practice range that combines whizbang technology with a sports-bar atmosphere, Boaz Lyu was practicing diligently in a hitting bay, studying his swing positions, then launching high draws toward the back of the 260-yard range as friends Ashley Kim and Sang Lee looked on.

A few bays away, a fellow in a sleeveless T-shirt took a mighty swing with a driver, topped the ball a few yards in front of his hitting bay, turned toward his friends, laughed and took a swig from his Coors Light. Another mighty swing, another topped shot, another swig.

Fifteen yards away, a four-piece cover band was belting out everything from Tom Petty to ZZ Top. During a break a few minutes earlier, a half-dozen customers gathered near the makeshift stage for a hula-hoop contest to see who could “jump the line” – in TopGolf-speak, move to the front of the long line waiting for one of the 74 bays at the double-decker range.

At the restaurant behind the range, all of the tables were occupied, all of the bar stools taken. At the front counter, two guys carrying TaylorMade bags arrived, hoping to score an open bay. No luck. They turned and headed back toward the parking lot, where cars still were circling, hoping to find an empty space. Indeed, some customers had to park across busy Van Dorn Street.

“If you can’t find a spot in the parking lot, you know they’re doing something right,” said David Palmer, an

Alexandria resident who was there with his wife Caitlyn, brother-in-law Dale Kerns and his wife of two weeks, Jamie, Caitlyn’s sister.

The Kernses, who live in Damascus, Md., had made the 50-mile drive through the notorious Washington-area traffic so that Dale could celebrate his 29th birthday at TopGolf. “Birthday boy gets to choose,” teased Caitlyn Palmer.

Why TopGolf? Kerns said he liked the combination of golf, music and food, “and we can bring our wives.”

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Many golf industry metrics – such as participation, rounds played and course closings – have trended negative for years. But you wouldn’t know it from the scene playing out at TopGolf. That Friday, according to a running tabulation produced by Stephen Moskal, director of instruction at the Alexandria location, more than 4,000 balls were dispensed each hour. By the time the range closed at 1 a.m., it had surpassed more than $40,000 in daily revenue. Last year, more than 173,000 customers – an average of nearly 500 per day – visited the Alexandria location.

In 2011, 1.2 million visitors hit 82 million golf balls at TopGolf’s seven locations, which include three in England.

TopGolf was developed in the late 1990s by Steve and Dave Jolliffe, identical twins who found their local practice range in Watford, England, somewhat lacking. They hit upon the idea of putting radio-frequency identification microchips in golf balls so that players could receive immediate feedback on distance and accuracy. Their first range, opened in 2001, had revenues of £4 million (approximately $6.3 million in today’s dollars) in its first year of operation, according to Randy Starr, chief development officer of TopGolf, now based in the U.S., with offices in Chicago and Dallas.

There are five TopGolf games, but the basic principle is the same: Players scan each RFID ball to imprint their “signature,” then try to hit the balls into “outfield” targets, which are similar to dartboards. Those targets, scattered from 25 yards to more than 200 yards, contain scanners that track the distance of each shot and how close the ball was to the flag at the target’s center, then transmit that information back to the flat-screen monitors in each hitting bay.

“We are very numbers-oriented, so you can track progress,” Moskal said.

The TopGolf facility has all of the elements of a traditional practice range. The balls – which cost $1.35 each to produce – perform like ordinary golf balls. Players serious about improving can visit Moskal, who teaches about 1,500 hours per year and has a staff of four full-time instructors and two junior instructors. He has 52 players in his junior program and runs junior tournaments at local courses. Launch monitors also allow TopGolf to provide club-fitting services.

Over the past decade, however, TopGolf “has evolved from a high-tech driving-range model into more of a full-scale entertainment center,” Starr said.

The company estimates that 50 percent to 60 percent of its customers are beginners. (Anecdotally, that seemed to be borne out at the Alexandria facility.) The quiet, reserved atmosphere of most practice ranges “is completely opposite of how it is here,” said Lyu, who said he practices five times per week, often late at night.

For a serious player such as Lyu, that’s not always a good thing, he said, “especially when the alcohol starts flowing and (players) want to be like the alpha male and hit it as far as they can.”

Food and beverage sales account for about 60 percent of TopGolf’s revenues. The atmosphere is often raucous, music is a constant and servers bring meals and drinks to customers at the hitting bays. TopGolf looks for employees who will thrive in that environment.

Jimmy Gaston, an Army captain, who is stationed a mile away at Fort Belvoir, visits several times each week, even in the winter, and likes the combination of socializing and competition. Gaston was particularly fond of a January charitable promotion called “Suits & Boots,” in which customers play in swimsuits. (On those occasions, the heat lamps in each bay are particularly useful in Alexandria, the company’s northernmost U.S. location.)

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Going forward, TopGolf is building bigger facilities with more elaborate restaurants that can handle large groups. (Corporate events account for 30 percent of revenues.) Starr said that TopGolf plans to open a Houston location this fall and five new locations in 2013, starting with Austin, Texas, in the first quarter. At least eight new locations are planned in subsequent years. Most will be in the Sunbelt, though Starr said he is confident the concept will play in Northern climes.

“We’re trying to attract people who are golfers, casual golfers or (nongolfers) who are intimidated by traditional golf,” Starr said. “It’s a unique and fun, but not intimidating, access point into the sport.”

He added that five patents – covering technology in the golf balls, targets and other parts of the game – will make it difficult for other companies to enter this space.

With so many customers coming through TopGolf’s doors, there’s a natural question as to whether some of those novice golfers will transition to traditional golf.

Since April 2011, ClubCorp USA, the Dallas-based firm that manages 103 private and public golf clubs, has been marketing its membership programs to TopGolf customers, according to Jamie Walters, ClubCorp’s executive vice president, sales and marketing. He said about 20 TopGolf members have joined ClubCorp’s Dallas Young Executive membership program. In exchange, ClubCorp occasionally hosts outings for TopGolf groups. Earlier this month, ClubCorp hosted 36 TopGolf members at Las Colinas Country Club in Irving, Texas.

“They have hit a sweet spot,” Walters said of TopGolf, adding, “Over time, it’s going to be a good feeder system.”